The Heritage Foundation is Correct...If anyone is to blame for the payroll tax holiday going away it's the President and the Democratically controlled Senate.....Certainly not the House....
Senators, Do Your Job and Get to Work
On the front page of the White House's website, a clock slowly ticks away, second by second, counting down to the day, hour, minute, and second that the nation's payroll tax "holiday" expires and the American people get socked right where it counts -- in the pocket book. And just next to that clock is a message laying the blame squarely on the House of Representatives. But today the real culprit in this debacle is the U.S. Senate which, right now, is home for the holidays already, celebrating with family while Washington sits in a stalemate.
In a rare appearance in the White House press room yesterday, President Barack Obama reiterated his message, blaming Washington's inaction on "a faction of Republicans in the House" and their "refusal to cooperate" with the Senate -- as if it's the job of Members of Congress to go along and get along for the sake of advancing the President's agenda, regardless of whether it's the right move for America. As a reminder, this is the same President who has not met with House Republican leadership in five months and is now praising the grand accomplishment of a Senate that has failed to pass a budget for nearly 1,000 days under Majority Leader Harry Reid's (D-NV) direction.
As you might not be surprised to learn, there is, of course, more to the story than the President lets on. Here's what you need to know about the latest standstill in Washington that, unfortunately, follows much of the same order of business that America has witnessed for the past year.
In a matter of days, the payroll tax "holiday" will expire, meaning higher taxes for working Americans. At the same time, fees for physicians and hospitals providing Medicare services will be severely cut and additional weeks of unemployment benefits for the long-term unemployed will run out. None of this was unexpected. This was not an unforeseen calamity that caught Washington by surprise. They saw it coming, and it's been on their list of things to do since last December--yet here we are waiting for a resolution and watching as Republicans and Democrats point fingers at each other.
Heritage's Alison Fraser, Director of the Thomas A. Roe Institute for Economic Policy Studies, describes the state of play on the Hill today:
To its credit, the House passed a bill which, while not perfect, would at least prevent the looming tax hike for all working Americans, extend additional unemployment benefits and prevent cuts to Medicare providers with another “Doc Fix” for a full year. Besides these three key policies, the House also included some policies helpful to job creation as well as an important change to fix Medicare’s finances, thus strengthening it for seniors today and tomorrow. This change is crucial toward tackling the nation’s largest and most pressing fiscal issue -- our entitlement crisis.
Somehow this was too much to do for the Senate. Unable to get the job done right, they passed a measly two-month extension of these three policies and quickly got out of Dodge, a.k.a. the Nation’s capital. Somehow, this is supposed to reassure us that [Reid] and the rest of his Senate colleagues are able to do the people’s business.
The trouble with the Senate's two-month plan is that it leaves so much undone and with so many people hanging. Working Americans will have no idea whether or not they'll suffer a tax hike when the extension expires. Employers will take on additional costs and have to jump through more hurdles in having to change their payroll systems to keep up with Washington's policy du jour -- and that will be an even bigger pain in the neck for small businesses who do payroll by hand. In short, it's terrible policy, and the American people deserve better.
To make this fruitcake taste even worse, as Fraser explains, the Senate packed in some good old-fashioned class warfare by "limiting the amount of income that qualifies for payroll tax relief so that upper-income earners don’t get more than their 'fair share' of the tax relief during this brief two-month period." And they paid for it all by increasing fees on Fannie Mae and Freddie Mac. Though such fees could have been used to help improve the government-sponsored housing agencies' horrendous financing, it is of course being used to pay for more spending and to offset the costs of avoiding a tax hike.
And this is where America finds itself. The House is in one corner. The President is in another. And Senators checked the box and hopped a flight home for the holidays instead of doing the people's business and reaching a compromise. Though President Obama would like us to believe the onus is on the House, it's the Senate that has dropped the ball. And for the sake of the American people, they should come back to Washington and get to work on reaching an agreement.